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Tagged with: 2014

Feb 2014 - Misleading GDP?

GDP Numbers Misleading?

The equities markets took a material tumble in early February 2014, citing signs of China slowing down, with its official PMI figure down by 0.5 from 51.0 to 50.5 when it was released on 1 Feb (still mirroring the earlier HSBC estimates that are 1.0 lower, and which fell from 50.0 to 49.5)

Apr 2014 - Gold Road Res

Gold Road Resources Limited (GOR) – Discovering Gold Deposits along the Yamarna Greenstone Belt, starting with Gruyere


Jun 2014 - Market Bottomed?

Has the Resource Market Bottomed Yet ?

The question as to whether the resource market has bottomed yet (or not) has occupied most of the conferences that I have attended so far this year (2014). At all of those conferences (RIU Freo in February, RIU Sydney in May and Symposium Broken Hill in May), the "mood" has been upbeat.

Jul 2014 - Sirius Resources

Sirius Resources NL (SIR) – On the Critical Path to Nova Nickel Production by DQ2016 / MQ2017

Jul 2014 - Excelsior Gold Ltd

Excelsior Gold Limited (EXG) – Targeting Production from its Zoroastrian Pit by JQ15

Jul 2014 - Gold Road Patience

Patience has reaped major rewards for Gold Road starting with Gruyere

In the past month (since ~ May 28) there has been a significant rebound in some of the gold stocks to 1 July such as Silver Lake (SLR.ax) up 67% from 33c to 55c and Gold Road (GOR.ax) doubling from 15c to trade at 30c.

Aug 2014 - Viable PGE Orebody

Has Sirius discovered Australia's first viable PGE orebody?

Following up a known historical intersection by Anaconda in the 1970s of ~23m @ 0.56%Ni (incl 2.1m @ 1.27%Ni & 0.13%Cu), Sirius "hit the jackpot" with their first drillhole at their Taipan prospect on the Polar Bear peninsular of Lake Cowan. That drillhole (SPBD0046) had an intersection from 104.4m of 4.1m @ 3.8%Ni, 2.45%Cu & 0.08%Co and 0.89g/tPt + 1.60g/tPd (incl from 106m of 2.15m @ 5.84%Ni, 3.73%Cu, 0.12%Co & 1.10g/tPt + 1.65g/tPd).

Aug 2014 - Australia's New Age

Australia's New Golden Age of Discovery

In his presentation at Diggers 2014, Evolution's Jake Klein showed a figure of gold discoveries over the period from 1990 to 2013, under the caption "Gold discoveries increasingly rare". The figure showed that ~>40mozpa was being discovered from 2001 to 2009, and then only ~15moz in 2010 and 2011, and since then almost nothing.

Aug 2014 - Gold Road Res

Gold Road Resources (GOR) rating it as a BUY at $0.335 with a target of >$0.45 (it has already doubled since our last report at 16.5c in April 2014, available on our website)

Sep 2014 - Struggle for Control

The Struggle between East and West for Control of the Gold Price

After Diggers, the gold price fell in ~6 weeks by over US$100/oz from ~$1320/oz to ~$1210/oz by 22 September 2014, and fortunately the A$ fell too, currently at ~US$0.89, which has cushioned some of the blow for the Australian gold producers.

Oct 2014 - MacPhersons Res

MacPhersons Resources Ltd (MRP) – Australia's Next Silver Play Heads towards production of silver, zinc & gold from 2016

Oct 2014 - East West Struggle

  • What happened in September 2014 ?
  • The gold price tumbled down about US$100/oz from ~US$1320/oz as shown in Figure 1a , with Goldmans re-iterating their forecast (in early Sept 2014) of $1050/oz by y/e December 2014, and stating "short" gold, based on a stronger US economy and strengthening US$.
  • As a delegate commented at China's (Govt participated, first) Gold Congress in Beijing from 10 to 12 Sept 2014, "Everyone knows that Goldmans talk their own book. If they have the financial power to cause (manipulate?) that to happen & make money for their clients,what's wrong with that?"
  • At the Congress, China was clearly frustrated with the gold price. More than one presenter stated "in 2013 : we (China) produced the most physical gold (~428t in 2013), consumed the most gold (~1100t), and traded the most gold in Asia (>40kt in 2013), but yet we have little control over the gold price, especially outside of our normal trading hours (ie Comex)".
  • China believes one of the main issues affecting the gold price is the strength of the US$,with gold showing a classic inverse correlation to it. The US$ index has continued to strengthen because there is no alternative reserve currency, with the € (Euro), £ (GBP) and ¥ (JPY) all in trouble.
  • ICBC (and China) appears to firmly believe that in the long term, gold has to rise, simply from its direct correlation with the combined world central bank's balance sheets as shown in an ICBC presentation, with the current movements in the gold price shown in Figure 1b, described as "a short-term fluctuation in a long-term rising chart". It has to be recognised that China does not think of gold from a < 1-year viewpoint, it takes more of a 5, 10 or 20-year outlook and beyond.
  • Aside from the significant rising jewellery and investment demand for gold and silver in China and its manufacture into everyday objects such as plates, cups, goblets and tea-pots with a further 200m people expected to join the middle class to form 500m by 2020; current gold holdings in China are apparently ~5g/capita, compared to the world average of ~23g/capita.
  • Against this background, on 29 September 2014 (being the one-year anniversary of the official launch of Shanghai's FTZ [free trade zone]) the International Board was to be formed by China in Shanghai's FTZ. The two initial aims of the International Board are the establishment of a recognised daily world gold benchmark in RMB/g (with physical trading backed by a 1000t gold vault) and the internationalisation of the RMB as a reserve currency.
  • However, on 18 September, China's Premier Li Keqiang launched its international gold bourse 11 days earlier than planned (due to the weak gold price ?). All gold transacted within the FTZ has to be physically backed and held in the currently 1000t FTZ vault. Known as "Shanghai Gold" contracts they are denominated in RMB/g. The main contract was expected to be the 25kg bars. Gold control was targeted to be first, then silver, then platinum and then spot.
  • China has planned for this internationalisation, and the rest of the western world is scrambling to catch up. Singapore announced it was having trading difficulties with its 25kg US$/oz launch now delayed from September to "sometime in October". At the Congress, the CME (Comex) stated in a presentation that they would be launching a new 1kg US$/oz physical contract in Hong Kong later this year (date not specified) - which all infers that the western world were not fully prepared for it.

Nov 2014 - China Taking Control

China appears to have taken control of the commodity price markets

..through actions or words, that has mostly resulted in lower commodity prices with the two most obvious examples being gold and iron ore.

Dec 2014 - Waiting Leisurely

"Wait leisurely for an exhausted enemy"

I first heard this "article of war" in a clca presentation by Leonie Mckeon on doing business in China, at the Symposium Conference in Broken Hill in May 2012, (contained in an earlier issue of Paydirt) and did not really appreciate its significance until now.